In March last year, CG Power had announced its plans to establish a joint venture (JV) with Renesas Electronics Corporation (Japan) and Stars Microelectronics (Thailand) Public Co. to build and operate an outsourced semiconductor assembly and test (OSAT) facility in India.
The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the project of the JV under India’s Semiconductor scheme on 29 February 2024.
The JV plans to invest INR 7,600 crores over a five-year period, which will be financed through a mix of subsidies, equity, and potential bank borrowings as required.
The JV will set up a manufacturing facility in Sanand, Gujarat, with a capacity that will ramp up to 15 million units per day. The JV will manufacture a wide range of products – ranging from legacy packages such as QFN and QFP to advanced packages such as FC BGA, and FC CSP. The JV will cater to industries such as automotive, consumer, industrial, 5G, to name a few.
In a regulatory filing made during market hours today, CG Power informed that the India Semiconductor Mission (ISM) under the Ministry of Electronics and Information Technology, Government of India (MeitY), had approved the grant of subsidy/fiscal support towards capex, of up to Rs 3,501 crore, subject to the execution of Fiscal Support Agreement.
Accordingly, CG Power and Industrial Solutions (company), ISM and CG Semi Private Limited (subsidiary company/project company incorporated for setting up the OSAT facility) has today i.e. 17 January 2025 entered into the fiscal support agreement.
CG Power, part of the Murugappa group, has two segments - power systems and industrial systems. The power systems segment manufactures electrical products such as transformers, switchgears and circuit breakers, which find application in power transmission. The industrial systems segment manufactures high and low tension rotating machines (motors and alternators), stampings, as well as railway transportation and signalling products.
The company reported 37.18% fall in standalone net profit to Rs 223 crore in Q2 FY25 from Rs 355 crore in Q2 FY24. Revenue from sales rose by 19% year-over-year (YoY) to Rs 2,270 crore during the period under review.